Tag Oil reserves soar 300pc

Small oil company Tag Oil is growing fast in Taranaki, with proven and probable reserves up 300 per cent to more than 6.6 million barrels of oil.

Production revenues from its Taranaki wells jumped from C$13 million to C$43m (NZ$15.9m to NZ$52.5m) in the latest year. The company has its headquarters in Vancouver, Canada.

Tag said net income was almost C$19m in the past year compared with just under C$1.3m in the previous year.

It has now drilled 15 successful wells in a row in Taranaki. That will let Tag produce an extra 4000 barrels of oil a day ‘‘sitting behind the pipe’’ once it has upgraded its production facilities, as well as more production from new wells drilled.

That means Tag Oil is poised to increase its Taranaki oil and gas production to the equivalent of more than 5000 barrels a day.

Tag also plans to drill up to another 30 shallow prospects in Taranaki, at a cost of $2m to $3m each, at its Sidewinder and Cheal permits.

Deeper gas wells would cost up to $10m each, targeting the Cardiff and Hellfire prospect, which may be drilled in early 2013, but possibly late this year.

The company is now debt free with about C$105m in cash on the balance sheet, in part from a share issue to raise about C$46m.

In its March year report just out, Tag Oil said proven and probable reserves had risen from 1.68 million barrels of oil equivalent (boe) last year, to 6.624m boe this year, with 82 per cent of that in oil and the balance in gas.

Tag’s shares last traded at C$7.37 on the Canadian market, up 15 per cent, but down from a peak above C$10 a couple of months ago.

The latest reserves assessment is confined to shallow formations in Taranaki at less than 2000 metres deep, within just 24 per cent of Tag’s Cheal acreage and only 2.5 per cent of Tag’s Sidewinder acreage.